Attached files
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EX-31.1 - CEO CERTIFICATION Q3 09 - LOCATEPLUS HOLDINGS CORP | ceocertq309.htm |
EX-31.2 - CFO CERTIFICATION Q3 09 - LOCATEPLUS HOLDINGS CORP | cfocertq309.htm |
EX-32.1 - CEO CFO SOX Q3 09 - LOCATEPLUS HOLDINGS CORP | ceocfosoxq309.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM 10-Q
x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the
quarterly period ended September 30, 2009
OR
¨
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the
transition period from ____________ to ____________ .
Commission
File Number 000-49957
LocatePLUS
Holdings Corporation
(Exact
name of registrant as specified in its charter)
Delaware
|
04-3332304
|
|
(State
or other jurisdiction of
incorporation
or organization)
|
(I.R.S.
Employer
Identification
No.)
|
100
Cummings Center, Suite 235m, Beverly, MA
|
01915
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
(978)
921-2727
(Registrant’s
telephone number, including area code)
(Former
name, former address and former fiscal year, if changed since last
report.)
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes x No ¨
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes ¨ No ¨
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer”, “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
Large
accelerated filer ¨
Accelerated filer ¨
Non-accelerated
filer ¨ (Do not
check if a smaller reporting company) Smaller reporting company x
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act.) Yes ¨ No x
The
number of shares of Common Stock outstanding at November 13, 2009 was
49,993,987
Page
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* *
*
Consolidated
Condensed Balance Sheets
|
||||||||
September 30,
2009
(un-audited)
|
December
31,
2008
-
|
|||||||
Assets
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 142,101 | $ | 92,465 | ||||
Accounts
receivable
|
726,839 | 510,964 | ||||||
Prepaid
expenses and other current assets
|
163,284 | 222,820 | ||||||
Total
current assets
|
1,032,224 | 826,249 | ||||||
Property
and equipment, net
|
664,608 | 715,553 | ||||||
Goodwill | 850,413 | |||||||
Other
assets
|
95,840 | 79,464 | ||||||
Total
assets
|
$ | 2,643,085 | $ | 1,621,266 | ||||
Liabilities
and Stockholders’ (Deficit) Equity
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable
|
978,426 | 1,139,317 | ||||||
Accrued
expenses
|
3,923,148 | 3,474,152 | ||||||
Deferred
revenue
|
359,129 | 306,875 | ||||||
Current
Notes Payable
|
336,849 | 607,883 | ||||||
Current
Convertible notes payable
|
3,046,761 | 2,586,992 | ||||||
Total
current liabilities
|
8,644,313 | 8,115,219 | ||||||
Notes
payable
|
- | 247 | ||||||
Long
Term Convertible notes payable
|
1,500,000 | 1,500,000 | ||||||
Total
liabilities
|
10,144,313 | 9,615,466 | ||||||
Commitments
and contingencies
|
||||||||
Stockholders’
equity:
|
||||||||
Common
Stock , $0.01 par value,
50,000,000
shares authorized
|
||||||||
49,993,987
shares issued and
outstanding
at September 30, 2009
|
499,940 | 237,955 | ||||||
Additional
paid-in capital
|
39,399,198 | 39,395,136 | ||||||
Warrants
|
3,627,194 | 3,627,194 | ||||||
Shares pending issuance | 900,000 | |||||||
Impairment
on Assets
|
(873,500 | ) | (873,500 | ) | ||||
Accumulated
deficit
|
(51,054,060 | ) | (50,380,985 | ) | ||||
Total
stockholders’ equity
|
(7,501,228 | ) | (7,994,200 | ) | ||||
Total
liabilities and stockholders’ equity
|
2,463,085 | 1,621,266 | ||||||
The
accompanying notes are an integral part of these un-audited consolidated
financial statements.
See
accompanying notes and accountants report
Consolidated
Statement of Operations
|
|
||||||||||||||||
For
the three
months
ended
September 30,
|
For
the nine
months
ended
September
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
|
||||||||||||||||
Revenues
|
||||||||||||||||
Information
Sales – CD Rom
|
103,191 | 134,253 | 277,386 | 356,028 | ||||||||||||
Information
Sales - Online
|
1,405,839 | 1,428,010 | 4,159,543 | 4,302,311 | ||||||||||||
Information
Sales - Channel
|
320,948 | 554,903 | 985,247 | 1,671,402 | ||||||||||||
Information
Sales - Wireless
|
1,759 | 1,439 | 4,806 | 4,858 | ||||||||||||
Total
revenues
|
$ | 1,831,737 | $ | 2,118,605 | $ | 5,426,982 | $ | 6,334,599 | ||||||||
Costs
and expenses:
|
||||||||||||||||
Costs
of revenues
|
||||||||||||||||
CD
Rom
|
23,223 | 8,440 | 40,020 | 38,623 | ||||||||||||
Online
and Channel
|
357,858 | 372,532 | 1,068,422 | 1,053,189 | ||||||||||||
Selling
and marketing
|
286,169 | 420,945 | 886,259 | 1,182,850 | ||||||||||||
General
and administrative
|
1,132,770 | 1,213,056 | 3,678,571 | 3,845,183 | ||||||||||||
Research
and development
|
132 | 48,531 | 29,424 | 111,690 | ||||||||||||
Total
operating expenses
|
$ | 1,800,152 | $ | 2,063,504 | $ | 5,702,696 | $ | 6,231,535 | ||||||||
Operating
income (loss)
|
31,585 | 55,101 | (275,714 | ) | 103,064 | |||||||||||
Other
income (expense):
|
||||||||||||||||
Interest
expense
|
(199,249 | ) | (150,516 | ) | (400,835 | ) | (518,116 | ) | ||||||||
Other
income
|
440 | 855 | 3,365 | 6,392 | ||||||||||||
Net
loss
|
$ | (167,224 | ) | $ | (94,560 | ) | $ | (673,184 | ) | $ | (408,660 | ) | ||||
Basic
and diluted net loss per share
|
$ | (0.003 | ) | $ | (0.005 | ) | $ | (0.016 | ) | $ | (0.028 | ) | ||||
Shares
used in computing basic
and
diluted net loss per share
|
49,808,203 | 20,598,586 | 42,595,824 | 14,464,767 |
Consolidated Statements of Cash Flows | ||||||||
For
the nine
September
|
months
ended
30,
|
|||||||
2009
|
2008
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
income (loss)
|
$ | (673,184 | ) | $ | (408,660 | ) | ||
Adjustments
to reconcile net income (loss) to net
|
||||||||
cash
used in operating activities:
|
||||||||
Depreciation
and amortization
of
property and equipment
|
91,782 | 452,358 | ||||||
Provision
for doubtful accounts
|
7,000 | (56,369 | ) | |||||
Interest
expense related to warrants
issued
with debt
|
259,651 | 197,051 | ||||||
Acquisition of Goodwill | (850,413 | ) | - | |||||
Shares pending issuance | 900,000 | - | ||||||
Stock
Based Compensation
|
- | 42,977 | ||||||
Changes
in assets and liabilities:
|
||||||||
Accounts
receivable
|
(222,875 | ) | 172,861 | |||||
Prepaid
expenses and other assets
|
59,536 | 25,358 | ||||||
Accounts
payable
|
(262,892 | ) | (215,469 | ) | ||||
Accrued
expenses
|
448,996 | (50,479 | ) | |||||
Deferred
revenue
|
52,254 | 21,220 | ||||||
Security
deposits
|
(16,376 | ) | - | |||||
Net
cash provided (used by) by operating
activities
|
(206,521 | ) | 180,848 | |||||
Cash
flows from investing activities:
|
||||||||
Purchases
of property and equipment
|
(40,837 | ) | (1,231 | ) | ||||
Net
cash used in
investing
activities
|
(40,837 | ) | (1,231 | ) | ||||
Cash
flows from financing activities:
|
||||||||
Repayment
of debt
|
(78,006 | ) | (113,035 | ) | ||||
Proceeds
from issuance of debt
|
375,000 | - | ||||||
Payments
of obligations under
capital
lease
|
- | (33,590 | ) | |||||
Net
cash used in financing
activities
|
296,994 | (146,625 | ) | |||||
Net
increase (decrease) in cash and
cash
equivalents
|
49,636 | 32,992 | ||||||
Cash
and cash equivalents,
beginning
of period
|
92,465 | 96,142 | ||||||
Cash
and cash equivalents, end of period
|
$ | 142,101 | $ | 129,134 | ||||
The
accompanying notes are an integral part of these un-audited consolidated
financial statements.
See
accompanying notes and accountants report
LocatePLUS
Holdings Corporation (the “Company”) was initially incorporated in Massachusetts
in 1996 as Worldwide Information, Inc. In July 1999, the Company
reincorporated in Delaware and changed its name to LocatePLUS.com,
Inc. On August 1, 2001, the Company changed its name from
LocatePLUS.com, Inc. to LocatePLUS Holdings Corporation as part of a corporate
restructuring. Also, as part of the restructuring, the Company
created two wholly-owned subsidiaries, LocatePLUS Corporation and Worldwide
Information, Inc. The restructuring was completed by
commonly-controlled entities and, accordingly, was accounted for based on
historical cost. In September 2003, the Company, through its newly
formed wholly owned subsidiary Entersect Corporation, f.k.a Certifion
Corporation, acquired all of the assets of Project Entersect
Corporation. The acquisition was accounted for as a purchase and is
recorded with the Company's operations from the date of purchase through
December 31, 2003. In October 2003, the Company merged Voice Power
Technology into its newly formed wholly owned subsidiary Dataphant,
Inc. There were no assets acquired in this acquisition and the
Company issued 2,500,000 shares of its Class B Non-Voting common stock to the
stockholders of Voice Power Technology in consideration for a two year
non-competition agreement with these stockholders. On January 6,
2004, the Company formed Metrigenics, Inc, a wholly-owned
subsidiary.
On
September 24, 2009, the Company acquired all the stock of Employment Screening
Profiles, Inc.(d/b/a Trubackgrounds), a Florida corporation (“Trubackgrounds”),
Oldsmar (Tampa) Florida, engaged in the business of developing and
delivering integrated, customized Web-enabled solutions designed to aid in
background verification, applicant management and human resource collaboration
processes, in exchange for nine-million (9,000,000) shares of common stock of
the company. In addition, the Company is obligated to deliver all
nine-million shares of Common Stock on or before September 1,
2011. The seller shall have the right to require the Company to
deliver up to four million five hundred
thousand (4,500,000) shares at any time after September 1,
2010. If the Company is unable to deliver the four million five
hundred thousand shares by September 1, 2010, then the seller shall be entitled
to an escrow fee payable in cash on a quarterly basis. The escrow fee
shall be calculated at a rate of five percent (5.00%) per annum for the first 12
months following closing, then seven and one-half percent (7.5%) per annum for
months 13 through 18 inclusive and then twelve and one-half percent (12.5%) per
annum thereafter (multiplied by the product of the number of shares remaining in
the Escrow account for the benefit of the seller and $0.1944). See
www.trubackgrounds.com. Trubackgrounds
serves large and small businesses with systems and information designed to
enable intelligent decisions and reducing costs through automation.
Trubackgrounds will continue to be operated as a wholly-owned subsidiary of the
Company and will collaborate in providing enhanced service capability to the
Company’s customers.
All inter-company accounts and
transactions have been eliminated in consolidation.
The
Company provides access to public information such as bankruptcy filings, real
estate transactions, motor vehicle records, and drivers’ licenses to commercial,
private sector and law enforcement entities in the United States. In
1999 and prior periods, this information was delivered to customers on compact
disks. In March 2000, the Company began providing information through
the Internet and in 2002 began providing information through the use of handheld
wireless devices.
Concentration
of Credit Risk
Financial
instruments that subject the Company to credit risk consist of cash and cash
equivalents, accounts receivable and notes receivable. The risk with
respect to cash and cash equivalents is minimized by the Company’s policies in
which such investments are placed only with highly rated financial institutions
and in instruments with relatively short maturities. The financial
stability of these financial institutions is constantly reviewed by senior
management. The notes receivable are placed with unrelated companies
that are also reviewed by management. Consequently, the carrying
value of cash and cash equivalents, and notes receivable approximates their fair
value based on the short-term maturities of these instruments.
Revenue
Recognition
The
Company provides access to public information such as bankruptcies, real estate
transactions and motor vehicles and drivers’ licenses. The Company
provides this information as an online service through its website, wirelessly
to handheld wireless devices, via XML over the Internet to Channel Partners, or
through licenses of the information on compact disks.
The
Company updates the information contained in compact disks (CD ROMs) either
quarterly or semi-annually. Revenue is recognized upon delivery to
the customer of a compact disk, provided that no significant obligations remain,
evidence of the arrangement exists, the fees are fixed or determinable, and
collectability is reasonably assured. Subsequent to October 2002,
compact disks are sold individually and customers may choose to have the disks
automatically shipped and billed.
Online
customers are charged fees which vary based on the type of information
requested. Revenue is recognized when the information requested is
downloaded, there is evidence of an arrangement, the fees are fixed or
determinable, and collectability is reasonably assured.
Wireless customers using
LocatePLUS Anywhere are charged a monthly subscription fee billed in
arrears. Revenue is recognized on a monthly basis when there is
evidence of an arrangement, the fees are fixed or determinable, and
collectability is reasonably assured.
Un-audited
Interim Financial Statements
The
accompanying interim consolidated condensed financial statements are un-audited
and have been prepared in accordance with accounting principles generally
accepted in the United States of America. These statements include
the accounts of LocatePLUS Holdings Corporation and its subsidiaries. Certain
information and footnote disclosures normally included in LocatePLUS Holdings
Corporation’s annual consolidated financial statements have been condensed or
omitted in accordance with Securities and Exchange Commission ("SEC") rules for
interim financial statements. The interim consolidated financial
statements, in the opinion of management, reflect all adjustments (consisting
only of normal recurring accruals) necessary to fairly present the financial
position as of September 30, 2009 and the results of operations and
cash flows for the three and nine months then ended. There were no
material unusual charges or credits to operations during the recently completed
fiscal quarter.
The
results of operations for the interim periods are not necessarily indicative of
the results of operations to be expected for the entire fiscal year. These
interim consolidated financial statements should be read in conjunction with the
audited consolidated financial statements for the year ended December 31, 2008,
which are contained in LocatePLUS Holdings Corporation’s Annual Report filed on
Form 10-K filed with the Securities and Exchange Commission on May 14,
2009.
Liquidity
and Operations
The
financial statements included in
this quarterly report have been prepared assuming that the Company will continue
as a going concern, and contemplate continuity of operations, realization of
assets and the satisfaction of liabilities and commitments in the normal course
of business. The Company has incurred significant net losses in each
of the last two years. In addition, the Company has incurred an
accumulated deficit of approximately $51 million through September 30,
2009.
On March
20, 2007, the Company issued a secured convertible debenture to Cornell Capital
Partners (now YA
Global Investments, L.P. ) in the aggregate principal amount of
$6,000,000 of which $3,000,000 was advanced immediately. The second
installment of $2,000,000 will be advanced immediately prior to the filing by
the Company with the Securities and Exchange Commission (the "Commission") of
the Registration Statement. The last installment of $1,000,000 will
be advanced immediately prior to the date the Registration Statement is declared
effective by the Commission. The Debentures mature on the third
anniversary of the date of issuance. The holder of the Debentures may convert at
any time amounts outstanding under the Debentures into shares of common stock of
the Company at a fixed conversion price per share equal to
$0.314. Under the Purchase Agreement the debentures are secured by
substantially all of the Company's, and its wholly owned subsidiaries’
assets.
|
Under
the Purchase Agreement, we also issued to Cornell five-year warrants in
six separate series as follows:
|
|
A
Warrants to purchase 2,384,814 shares of common stock at $0.314 per
share;
|
|
B
Warrants to purchase 2,186,079 shares of common stock at $0.343 per
share;
|
|
C
Warrants to purchase 2,017,919 shares of common stock at $0.372 per
share;
|
|
D
Warrants to purchase 1,748,863 shares of common stock at $0.429 per
share;
|
|
E
Warrants to purchase 1,499,026 shares of common stock at $0.50 per
share;
|
|
F
Warrants to purchase 1,500,000 shares of common stock at $0.01 per
share.
|
2. Other
Assets
Other
assets consist of the following at September 30, 2009:
Restricted
trading securities
|
$ 1,500
|
Security
deposits and other
|
$ 94,340 |
Total
|
$
95,840
|
Restricted
trading securities consist of 200,000 restricted shares of common stock in Data
Evolution Holdings, Inc. (DEH), which trades over the counter under the symbol
DTEV. These shares were acquired as part of an agreement to provide
service and data to DEH. The service and data was valued at
$875,000. At the time the service and data was valued, November 22,
2004, the trailing 10 day average closing price of DTEV was $5.96 per share, or
$1,192,000. Due to the fact that these shares were restricted, a
mutually agreed upon 25% liquidity discount was applied to the value, or
$875,000, as such 200,000 shares were exchanged for the service. At
December 31, 2008, the 10-day trailing average closing price was $0.01 per
share, or the value of the shares was $2,000. An impairment to the current value
has been recorded to adjust the security carrying value to the original 25%
discount. The company recorded an impairment of $873,500 and the
adjusted carrying value is now $1,500.
3. Stock
Options
Effective
January 1, 2006, the Company adopted the fair value recognition provisions of
Statement of Financial Accounting Standards No. 123(R)(FASB ASC 718), “Share
Based Payment” (“SFAS No. 123(R)”) using the modified prospective transition
method. Under that transition method, compensation cost recognized in the nine
months ended September 30, 2009 includes: (a) compensation cost for all
stock-based payments granted prior to, but not yet vested as of January 1, 2006,
based on the grant date fair value estimated in accordance with the original
provisions of SFAS No. 123, and (b) compensation cost for all stock-based
payments granted subsequent to January 1, 2006, based on the grant date fair
value estimated in accordance with the provisions of SFAS No. 123(R). Results
for prior periods have not been restated, as provided for under the
modified-prospective method.
SFAS No.
123(R) requires the use of a valuation model to calculate the fair value of
stock-based awards. The Company has elected to use the Black-Scholes-Merton
(“BSM”) option valuation model, which incorporates various assumptions including
volatility, expected life, and interest rates. The assumptions used for the
nine-month periods ended September 30, 2009 and September 30, 2008 and the
resulting estimates of weighted-average fair value per share of options granted
during those periods are as follows:
For
the nine months ended
|
||
September
|
||
2009
|
2008
|
|
Expected
life
|
6
years
|
6
years
|
Volatility
|
33%
|
31%
|
Risk
free interest rate
|
4.54
%
|
4.86
%
|
Dividend
yields
|
-
|
-
|
Weighted-average
fair value of options granted during the period
|
-
|
-
|
The expected life of the options
represents the estimated period of time until exercise and is based on
historical experience of similar awards, giving consideration to the contractual
terms, vesting schedules and expectations of future employee behavior. For 2009
and 2008, expected stock price volatility is based on a combination of
historical volatility of the Company’s stock and the one-year implied volatility
of its traded options, for the related vesting periods. Prior to the adoption of
SFAS 123R, expected stock price volatility was estimated using only historical
volatility of the Company’s stock. The risk-free interest rate is based on the
implied yield available on U.S. Treasury zero-coupon issues with an equivalent
remaining term. The Company has not paid dividends in the past and does not plan
to pay any dividends in the near future.
4. Notes
Payable
In 2001,
the Company issued a Convertible promissory note in the original principal
amount of $10,000, due on demand that bears interest at the rate of 12% per
annum. The note is convertible into 44,444 shares of Common Stock at
the note holder’s option. The note requires quarterly payment of
interest until the principal is repaid or converted.
During
2003, the Company received $2.3 million, by issuing subordinated promissory
notes bearing simple interest ranging from 10% and 12% per annum. In
2007, the terms of these notes were re-negotiated and now bear interest ranging
from 19% to 30%. The balance of this debt at September 30, 2009 is
$80,135
On March
20, 2007, the Company issued a secured convertible debenture to Cornell Capital
Partners (now YA Global Investments, L.P.) in the aggregate principal amount of
$6,000,000 of which $3,000,000 was advanced immediately. The second
installment of $2,000,000 will be advanced immediately prior to the filing by
the Company with the Securities and Exchange Commission of the Registration
Statement. The last installment of $1,000,000 will be advanced
immediately prior to the date the Registration Statement is declared effective
by the Commission. The Debentures mature on the third
anniversary of the date of issuance. The holder of the Debentures may convert at
any time amounts outstanding under the Debentures into shares of common stock of
the Company at a fixed conversion price per share equal to
$0.314. Under the Purchase Agreement the debentures are secured by
substantially all of the Company's, and its wholly owned subsidiaries’
assets.
|
Under
the Purchase Agreement, we also issued to Cornell five-year warrants in
six separate series as follows:
|
|
A
Warrants to purchase 2,384,814 shares of common stock at $0.314 per
share;
|
|
B
Warrants to purchase 2,186,079 shares of common stock at $0.343 per
share;
|
|
C
Warrants to purchase 2,017,919 shares of common stock at $0.372 per
share;
|
|
D
Warrants to purchase 1,748,863 shares of common stock at $0.429 per
share;
|
|
E
Warrants to purchase 1,499,026 shares of common stock at $0.50 per
share;
|
|
F
Warrants to purchase 1,500,000 shares of common stock at $0.01 per
share.
|
Also in
connection with the sale and issuance of the Debentures, the Company entered
into a settlement agreement with Dutchess Private Equities Fund, Ltd. for the
settlement of a dispute regarding the amount due under debt instruments issued
by the Company to Dutchess during 2005 and 2006. Pursuant to the
terms of the Settlement, the Company immediately paid a cash amount of
$1,500,000 with two additional cash payments in the amount of $300,000 each to
be made on the date that (i) the Company files the Registration Statement (or,
if earlier, within 45 days) and (ii) the Registration Statement is declared
effective (or, if earlier, within 145 days). The Company also issued
a Note in the amount of $1,500,000 and agreed to reduce to $0.10 per share the
exercise price of the warrants issued to Dutchess. Dutchess agreed to
terminate any security interest in the Company’s assets upon the Initial
Payment.
On
December 11, 2007, the Company received a
letter dated December 6, 2007 ( the "Notice Letter"),
from YA Global Investments, L.P., (formerly known as
Cornell Capital
Partners, L.P.) notifying the Company of
certain Events of Default under the
Secured Convertible Debenture dated March 20, 2007 of the Company (the
"Debenture"). As a result of this default, the entire note has been
re-classified as short term.
5. Legal
Proceedings
On
September 15, 2008, Carl L. Green on behalf of Dawn Martinson Green, a
stockholder, filed a complaint against the Company, James Fields, and Jon
Latorella,, Carl Green et al v
LocatePlus Holdings et al, Delaware Court of Chancery C.A. No 4032-CC. . The defendants have moved
to dismiss and moved for a more definite statement. The Plaintiffs generally
allege that the individual defendants somehow acted wrongfully when they agreed
to allow certain debt to be exchanged for stock. The Plaintiffs allege against
the individual defendants that as directors they breached their duty of loyalty
by "enriching and entrenching" themselves and that they engaged in self-dealing
by diluting the shares of the Company for the purpose of entrenching themselves.
Against the Company the plaintiffs allege that the Company failed to allow an
inspection of books and records. On March 15, 2009, the court granted the
Company’s motion to dismiss the complaint.
On April
3, 2009, the Company filed a lawsuit styled LocatePLUS Holdings Corp., v.
Dutchess Capital Management, LLC, James Fields et al, in Suffolk County
Superior Court, in Massachusetts (Case No. 09-385-A). The Company is
seeking the return of 19,866,461 shares of our common stock (the “Dutchess
Shares”) improperly issued to and converted by Dutchess Capital
Management, LLC and its related entities (“Dutchess”). Specifically, the
lawsuit alleges that Dutchess breached the debenture agreements between
LocatePLUS and Dutchess by converting more stock than the maximum allowable
under the agreements (4.99%). In addition, the lawsuit alleges that
Dutchess violated Massachusetts state law by charging usurious interest and by
knowingly and willfully committing unfair and deceptive acts or practices. The
suit names the former President and CEO of the Company, James Fields (“Fields”)
as an improper transferee the Dutchess Shares. The lawsuit seeks, among others,
a temporary restraining order and a preliminary injunction enjoining Dutchess
and Fields from transferring the improperly-converted Dutchess Shares from
voting the Shares on any corporate matters until an arbitration can be
completed, seeks the return of the improperly-converted Shares, requests
unspecified compensatory damages and costs, and prays for such other relief as
the court deems proper. Fields and Dutchess denied
liability. Fields also counter-claimed for amounts due under the severance
provisions in his employment agreement.
On or
about May 17, 2009, the Company signed an agreement with Fields settling all
issues contained in the lawsuit,
as well as his counterclaims. The case against Fields, including his
counterclaims, was dismissed on May
18, 2009. The Dutchess Shares are currently held in escrow pending
completion of the payments required under the Settlement
Agreement.
LocatePLUS
intends to pursue the remaining claims vigorously to protect the interests of
its shareholders.
6. Segment
Information
The
Company has two reportable segments which management operates as distinct sales
organizations; these two segments are segregated by the nature of products and
services provided. The Company measures and evaluates its two
reportable segments based on revenues and costs of revenues. The CD
ROM segment provides information on motor vehicles and drivers’ licenses,
contained on compact disks. The online segment provides information
on individuals throughout the United States of America through the Company’s
website. No material operating costs, other than costs of revenues,
or assets and liabilities relate to the CD ROM segment.
|
For
the three months ended
September
30,
|
For
the nine months ended
September
30,
|
||||||||||||||
2009
|
2008 | 2009 | 2008 | |||||||||||||
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
|||||||||||||
Reportable
segment sales:
|
||||||||||||||||
CD
Rom
|
$ | 103,191 | $ | 134,253 | $ | 277,386 | $ | 356,028 | ||||||||
Online
and Channel
|
1,726,788 | 1,982,913 | 5,144,790 | 5,973,713 | ||||||||||||
Total
Reportable segment sales
|
$ | 1,829,979 | $ | 2,117,166 | $ | 5,422,176 | $ | 6,329,741 | ||||||||
Costs
of segment sales:
|
||||||||||||||||
CD
Rom
|
23,223 | 8,440 | 40,020 | 38,623 | ||||||||||||
Online
and Channel
|
357,858 | 372,532 | 1,068,422 | 1,053,189 | ||||||||||||
Total
costs of reportable
segment
sales
|
$ | 381,081 | $ | 380,972 | $ | 1,108,442 | $ | 1,091,812 | ||||||||
|
7. Net
Income (Loss) Per Share
The
computations of basic and diluted income (loss) per common share are based upon
the weighted average number of common shares outstanding during the
period. The Company’s Common Stock potentially issuable upon the
exercise of stock options and warrants are anti-dilutive for the period ending
September 30, 2009 and were not included in the computations for the diluted net
loss per share.
8. Subsequent
Events
None
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
You
should read the following discussion and analysis of our consolidated financial
condition and results of operations together with our un-audited consolidated
financial statements and related notes included elsewhere in this quarterly
report. This report contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21 E of the
Securities Exchange Act of 1934, each as amended. Such
forward-looking statements are based on current information and expectations and
are subject to certain risks and uncertainties that may cause actual results to
differ materially from those described. Factors that may cause such differences
include but are not limited to, uncertainties relating to our ability to
successfully compete in our industry, uncertainties regarding our ability to
obtain financial and other resources for our product development and commercial
activities, and uncertainties relating to privacy regulations. These
factors, and others, are discussed from time to time in the Company’s filings
with the Securities and Exchange Commission. You should not place
undue reliance on these forward-looking statements, which speak only as of the
date they are made. We undertake no obligation to publicly update or revise
these forward-looking statements to reflect events or circumstances after the
date they are made. Further discussion of risk factors is also
available in our registration statements filed with the Securities and Exchange
Commission.
Overview
The
LocatePLUS Group is a business-to-business and business-to-government provider
of public information via our proprietary data integration
solutions. Since 1996, we have sold a CD-ROM-based product, which we
refer to as Worldwide Information™, that enables users to search certain motor
vehicle records and driver’s license information in multiple states through a
dynamic search engine, using complete or partial information. Since
March 1, 2000, we have maintained a database that is accessible through the
Internet, known as LocatePLUSÔ. Our
LocatePLUSÔ
product contains searchable and cross-referenced public information on
individuals throughout the United States, including individuals’ names,
addresses, dates of birth, Social Security numbers, prior residences, and, in
certain circumstances, real estate holdings, recorded bankruptcies, liens,
judgments, drivers’ license information and motor vehicle
records. Since September 2003, our wholly-owned subsidiary, Entersect
Corporation, f.k.a Certifion Corporation , has offered personal information for
self-certification purposes.
We
distribute our content both directly (through the Internet in the case of our
LocatePLUSÔ
product and through the mail in the case of our Worldwide Information™ CD-ROM)
and through “channel partner” arrangements, by which third-party database
providers obtain access to our databases in consideration for a royalty (such as
job search and on-line dating sites, in the case of our EntersectÔ
product).
On
September 1, 2003, through our wholly-owned subsidiary, Entersect Corporation,
f.k.a Certifion Corporation, we acquired all the assets of Project Entersect
Corporation in consideration for $62,662. The acquisition was
accounted for as a purchase and is recorded and reflected with our operations
from the time of purchase. The subsidiary operates under the trade
name Entersect. Entersect provides a self-identification and
validation service for online job posting and dating sites.
On
October 17, 2003, through our wholly-owned subsidiary, Dataphant, Inc., we
acquired Voice Power Technologies, Inc., a Texas-based provider of data
technology. In connection with this acquisition, Voice Power
Technologies, Inc. merged with and into Dataphant, Inc. As
consideration for the merger, shareholders of Voice Power Technologies, Inc.
received an aggregate of 2,500,000 shares of LocatePLUS Class B Non-voting
Common Stock. Through this acquisition, we now have information
concerning virtually all landline phone numbers in the United States and
approximately 25% of United States cell phone numbers. This data has
been integrated into our current product lines.
On January 6, 2004, the Company formed a wholly-owned subsidiary, Metrigenics,
Inc., with operations located in New York State. Metrigenics was
formed to develop new ways to integrate biometrics with
data. Metrigenics has finished first stage testing on matching DNA to
facial characteristics. In March, 2009, management made the decision to suspend
funding of this subsidiary which consisted primarily of research and development
costs. Management is hopeful that it will be able to resume funding
by year end and that a beta product be ready to test within that
timeframe.
On September 24, 2009, the Company acquired all the stock of Employment
Screening Profiles, Inc.(d/b/a Trubackgrounds), a Florida corporation
(“Trubackgrounds”), Oldsmar (Tampa) Florida, engaged in the business
of developing and delivering integrated, customized Web-enabled solutions
designed to aid in background verification, applicant management and human
resource collaboration processes, in exchange for nine-million (9,000,000)
shares of common stock of the company. In addition, the Company is
obligated to deliver all nine-million shares of Common Stock on or before
September 1, 2011. The seller shall have the right to require the
Company to deliver up to four million five hundred
thousand (4,500,000) shares at any time after September 1,
2010. If the Company is unable to deliver the four million five
hundred thousand shares by September 1, 2010, then the seller shall be entitled
to an escrow fee payable in cash on a quarterly basis. The escrow fee
shall be calculated at a rate of five percent (5.00%) per annum for the first 12
months following closing, then seven and one-half percent (7.5%) per annum for
months 13 through 18 inclusive and then twelve and one-half percent (12.5%) per
annum thereafter (multiplied by the product of the number of shares remaining in
the Escrow account for the benefit of the seller and $0.1944). See
www.trubackgrounds.com. Trubackgrounds
serves large and small businesses with systems and information designed to
enable intelligent decisions and reducing costs through automation.
Trubackgrounds will continue to be operated as a wholly-owned subsidiary of the
Company and will collaborate in providing enhanced service capability to the
Company’s customers.
Although
our products consist primarily of publicly available – and therefore
non-proprietary – information, we integrate data in our products in a
proprietary manner that allows users to access data rapidly and
efficiently. In addition, our LocatePLUS™ product utilizes
proprietary methodologies to link data from different sources associated with a
given individual to a single background report, even though the sources of data
with respect to a given individual may be incomplete or contain only partial
information with respect to that individual.
During
the quarter ended June 30, 2003 we launched our patent-pending Bull's-Eye
technology, which is currently integrated into a LocatePLUSÔ
product. Bull's-Eye is the first search tool in our industry that
allows users to correctly identify a person's current address based upon certain
currently available information. Typically, when a search is performed on an
individual using competing technologies, a number of addresses are pulled from a
database of public records. Bull's-Eye enhances or improves the search process
by cross-referencing current public utility and telephone records with
historical data to more accurately identify a person's current
address. We have also sought patent protection with respect to
aspects of our CareerScanÔ and TrustmeIDÔ
products.
On February 23, 2009,
the Company announced that at a meeting of the Board of
Directors held on February 18, 2009, the Board of
Directors voted to terminate the employment of James C.
Fields, the then current President, Chief Executive Officer, Acting
Chief Financial Officer and Treasurer. Following this decision,
the Board voted to appoint Geoffrey Lee, President of Entersect, a
wholly owned
subsidiary of LocatePLUS Holdings and Vice
President of Online Services for LocatePLUS as Interim Chief
Executive Officer and President. At a Board meeting held on February 24, 2009,
the Board elected Mr. Lee to the additional position
of Acting Treasurer.
Critical
Accounting Policies
We have
identified the policies below as critical to our business operations and the
understanding of our results of operations. The impact and any
associated risks related to these policies on our business operations are
discussed throughout this section where such policies affect our reported and
expected financial results. Note that our preparation of our
Consolidated Condensed Financial Statements requires us to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of our financial
statements, and the reported amounts of revenue and expenses during the
reporting period. There can be no assurance that actual results will
not differ from those estimates.
Our
accounting policies that are the most important to the portrayal of our
financial condition and results, and which require the highest degree of
management judgment relate to revenue recognition and the provision for
uncollectible accounts receivable. We estimate the likelihood of
customer payment based principally on a customer’s credit history and our
general credit experience. To the extent our estimates differ
materially from actual results, the timing and amount of revenues recognized or
bad debt expense recorded may be materially misstated during a reporting
period.
Revenue
associated with our Worldwide InformationÔ product is
recognized upon delivery to the customer of a CD-ROM, provided that no
significant obligations remain, evidence of the arrangement exists, the fee is
fixed or determinable and collectibility is reasonably
assured. Information in our Worldwide InformationÔ product is updated
and released either quarterly or twice a year. In the case of our
LocatePLUSÔ
product, we charge a fee to customers, which varies based upon the type and
quantity of information requested. Capitalizing on the synergies
gained through the Companies acquisitions, in 2004, Worldwide was able to
utilize the technology acquired through Voicepower Technologies, when it merged
into Dataphant, to develop the industry's first ever searchable
non-published
and cell phone CD-ROM.
Revenue from our LocatePLUSÔ product
is recognized when there is either an agreed upon royalty fee or the requested
information is downloaded, there is evidence of an arrangement, the fee is fixed
or determinable, and collectability is reasonably assured. We charge
our fees to customers’ credit cards (approximately 60% of our current
LocatePLUSÔ customer
base) or invoice customers for such fees on a monthly basis (approximately 40%
of our LocatePLUSÔ customer
base).
Revenue
from our EntersectÔ product
is recognized when certifications are purchased online (and paid for via credit
card) or the requested information is downloaded, there is evidence of an
arrangement, the fee is fixed or determinable, and collectibility is reasonably
assured.
Revenue
from Dataphant is generated exclusively through inter-company sales to our other
wholly owned subsidiaries and eliminated on consolidation.
Revenue
from the sale of web-based solutions for employment screening and related
activities is recognized upon the delivery of the system and upon receipt of
ongoing service fees.
Our costs
of revenue consist primarily of our costs to obtain data and software
maintenance expenses, which consist primarily of payroll and related expenses
for information technology personnel, Internet access and hosting charges, and
expenses relating to Web content and design. We obtain our data from
multiple sources and we have entered into various license agreements with
related data providers. In the nine months ended September 30, 2009
and 2008, we recorded $1,068,233 and $1,053,189 respectively, in costs related
to these agreements. In the event that any of our primary sources of
data became unavailable to us, we believe that we would be able to integrate
alternate sources of data without significant disruption to our business or
operations, as there are currently a number of providers of such
data.
Our
selling and marketing expenses consist of salaries and commissions paid to sales
representatives for the products that we offer, as well as direct mail
advertising campaigns and magazine and Internet-banner
advertisements.
General
and administrative expenses consist of payroll and related expenses for
non-sales, non-research and development and executive and administrative
personnel, facilities expenses, insurance, professional services, travel and
other miscellaneous expenses.
Interest
income consists of earnings on our cash and cash equivalents, short-term
investments and notes receivable. Interest expense is primarily
attributable to various notes issued through September 30, 2009. As
of September 30, 2009, we had gross notes payable (current and long-term)
totaling $4,977,648.
We have
incurred significant net losses since our inception. We incurred net
losses of approximately $673,000 during the nine months ended September 30, 2009
and $409,000 during the nine months ended September 30, 2008. Our
accumulated deficit as of September 30, 2009 was approximately $51
million.
On March
20, 2007, we issued a secured convertible debenture to Cornell Capital Partners
(now YA Global Investments, L.P.) in the aggregate principal amount of
$6,000,000 of which $3,000,000 was advanced immediately. The second
installment of $2,000,000 will be advanced immediately prior to the filing by
the Company with the Securities and Exchange Commission (the "Commission") of
the Registration Statement. The last installment of $1,000,000 will
be advanced immediately prior to the date the Registration Statement is declared
effective by the Commission. The Debentures mature on the third
anniversary of the date of issuance. The holder of the Debentures may convert at
any time amounts outstanding under the Debentures into shares of common stock of
the Company at a fixed conversion price per share equal to
$0.314. Under the Purchase Agreement the debentures are secured by
substantially all of the Company's, and its wholly owned subsidiaries’
assets.
Under the
Purchase Agreement, we also issued to Cornell five-year warrants in six separate
series as follows:
A
Warrants to purchase 2,384,814 shares of common stock at $0.314 per
share;
B
Warrants to purchase 2,186,079 shares of common stock at $0.343 per
share;
C
Warrants to purchase 2,017,919 shares of common stock at $0.372 per
share;
D
Warrants to purchase 1,748,863 shares of common stock at $0.429 per
share;
E
Warrants to purchase 1,499,026 shares of common stock at $0.50 per
share;
F
Warrants to purchase 1,500,000 shares of common stock at $0.01 per
share.
Also in
connection with the sale and issuance of the Debentures, the Company entered
into a settlement agreement with Dutchess Private Equities Fund, Ltd. for the
settlement of a dispute regarding the amount due under debt instruments issued
by the Company to Dutchess during 2005 and 2006. Pursuant to the
terms of the Settlement, the Company immediately paid a cash amount of
$1,500,000 with two additional cash payments in the amount of $300,000 each to
be made on the date that (i) the Company files the Registration Statement (or,
if earlier, within 45 days) and (ii) the Registration Statement is declared
effective (or, if earlier, within 145 days). The Company also issued
a Note in the amount of $1,500,000 and agreed to reduce to $0.10 per share the
exercise price of the warrants issued to Dutchess. Dutchess agreed to
terminate any security interest in the Company’s assets upon the Initial
Payment.
On
December 11, 2007, the Company received a
letter dated December 6, 2007 ( the "Notice Letter"),
from YA Global Investments, L.P., (formerly known as
Cornell Capital
Partners, L.P.) notifying the Company of
certain Events of Default under the
Secured Convertible Debenture dated March 20, 2007 of the Company (the
"Debenture"). As a result of this default, the entire note has been
re-classified as short term.
Three
Months Ended September 30, 2009 Compared to Three Months
Ended September 30, 2008
Revenues. Revenues
from our Worldwide InformationTM
CD-ROM product decreased to $103,191 for the three months ended September 30,
2009 from $134,253 for the three months ended September 30, 2008, a decrease of
23%. This decrease is attributable to the timing of shipments of
product as revenue is only recognized upon shipment. Revenues from
our Internet-based products decreased to $1,405,839 for the three months ended
September 30, 2009, as compared to $1,428,010 for the three months ended
September 30, 2008, a decrease of 2%. Revenue from channel partners
decreased to $320,948 from $554,903 a decrease of 42%. This decrease is
attributable to the loss a of large channel partner agreement in 2008. Revenues
from our wireless product, LocatePLUS AnyWhere™, were $1,759 during the three
months ended September 30, 2009 as compared to $1,439 during the three months
ended September 30, 2008, an increase of 22%.
Costs of
revenues. For the three months ended September 30, 2009, costs
of revenues for Worldwide InformationTM were
$23,223 as compared to $8,440 for the three months ended September 30, 2008, an
increase of 175%. This increase is attributable to the purchasing timeline of
data and increased costs of this data in various states. For the
three months ended September 30, 2009, our costs of revenues associated with
LocatePLUS™ online and channel were $357,858 as compared to $372,532 for the
three months ended September 30, 2008, a decrease of 4%.
Selling and marketing
expenses. Selling and marketing expenses for the three months
ended September 30, 2009 were $286,169 as compared to $420,945 for the three
months ended September 30, 2008, a decrease of 32%. The primary
reason for the reduction is due to the elimination of marketing activities that
generated less revenue than the cost to acquire that revenue as well as a
reduction in personnel.
General and administrative
expenses. General and administrative expenses for the three
months ended September 30, 2009 were $1,132,770 as compared to $1,213,056 for
the three months ended September 30, 2008, a decrease of 7%. This decrease is
attributable to various cost cutting efforts by
management.
Research and Development
expenses. Research and development expenses for the three
months ended September 30, 2009 were $132 as compared to $48,531 for the three
months ended September 30, 2008, a decrease of 99%. This decrease is
attributable to managements’ decision to suspend funding of the Metrigenics
subsidiary.
Interest
expense. Interest expense increased to $199,249 for the three
months ended September 30, 2009, from $150,516 for the three months ended
September 30, 2008, an increase of 32%. This expense is attributable
to interest payments being made on certain notes payable.
Other Income. Other
income decreased to $440 for the three months ended September 30, 2009, down
from other income of $855 for the three months ended September 30, 2008, a
decrease of 49%. This income is attributable to the collection of
certain accounts receivable that have previously been written off.
Nine Months
Ended September 30, 2009 Compared to Nine Months Ended September 30,
2008
Revenues. Revenues
from our Worldwide InformationTM
CD-ROM product decreased to $277,386 for the nine months ended September 30,
2009 from $356,028 for the nine months ended September 30, 2008, a decrease of
22%. This decrease is attributable to the timing of shipments of product as
revenue is only recognized upon shipment. Revenues from our
Internet-based products decreased to $4,159,543 for the nine months ended
September 30, 2009, as compared to $4,302,311 for the nine months ended
September 30, 2008, a decrease of 3%. Revenue from channel partners
decreased to $985,247 from $1,671,402, a decrease of 41%. This decrease is
attributable to the loss a of large channel partner agreement in 2008. Revenues
from our wireless product, LocatePLUS AnyWhere™, were $4,806 during the nine
months ended September 30, 2009 as compared to $4,858 during the nine months
ended September 30, 2008, a decrease of 1%.
Costs of
revenues. For the nine months ended September 30, 2009, costs
of revenues for Worldwide InformationTM were
$40,020 as compared to $38,623 for the nine months ended September 30, 2008, an
increase of 4%. For the nine months ended September 30, 2009, our costs of
revenues associated with LocatePLUS™ online and channel were $1,068,422 as
compared to $1,053,189 for the nine months ended September 30, 2008, an increase
of 1%.
Selling and marketing
expenses. Selling and marketing expenses for the nine months
ended September 30, 2009 were $886,259 as compared to $1,182,850 for the nine
months ended September 30, 2008, a decrease of 25%. The primary reason for the
reduction is due to the elimination of marketing activities that generated less
revenue than the cost to acquire that revenue as well as a reduction in
personnel.
General and administrative
expenses. General and administrative expenses for the nine
months ended September 30, 2009 were $3,678,571 as compared to $3,845,183 for
the nine months ended September 30, 2008, a decrease of 4%. Included in this
amount is a one-time charge of $387,500 for expenses of litigation and
settlement. This reduction is principally due to cost cutting efforts by
management.
Research and Development
expenses. Research and development expenses for the nine
months ended September 30, 2009 were $29,424 as compared to $111,690 for the
nine months ended September 30, 2008, a decrease of 74%. This decrease is
attributable to downsizing of personnel as well as managements
decision to suspend funding of the Metrigenics subsidiary
Interest
expense. Interest expense decreased to $400,835 for the nine
months ended September 30, 2009, from $518,116 for the nine months ended
September 30, 2008, a decrease of 23%. This expense is primarily
attributable to interest payments being made on certain notes
payable.
Other Income. Other
income decreased to $3,365 for the nine months ended September 30, 2009, down
from other income of $6,392 for the nine months ended September 30, 2008, a
decrease of 47%.
Liquidity
and Capital Resources
From our
incorporation in 1996 through December 31, 2008, we raised approximately $43
million through a series of private placements and public offerings of equity
and convertible debt to fund marketing and sales efforts and develop our
products and services.
As of
September 30, 2009, our cash and cash equivalents totaled $142,101.
In connection with an offering that
closed on August 15, 2005 we entered into a Purchase Agreement with certain
institutional and accredited investors relating to the private placement of
convertible term notes issued by the Company in the principal amount of
$8,965,000 and warrants to purchase up to 41,189,000 shares of our capital
stock. Of the proceeds from this offering, approximately $4.1 million was used
to retire current secured convertible notes, and the remainder will be used for
general working capital.
All of the notes are convertible, and
the warrants are exercisable, first into as many shares of our Class A Voting
Common Stock, par value $0.01 per share, as are available for issuance at the
time of conversion or exercise, and then into shares of our Class B Non-Voting
Common Stock, par value $0.01 per share. As part of our agreement
with these investors, we agreed to seek the approval from our stockholders of
the recapitalization of each outstanding share of our Class A Voting Common
Stock and our Class B Non-Voting Common Stock into a single class of voting
common stock, as well as a one-for-fifty reverse split of this new class of
common stock Upon approval these measures, the notes automatically convert into
shares of the new class of common stock, and any unexercised warrants will be
exercisable for shares of that class of stock as well. Without taking
into consideration interest payable on the notes, the notes are convertible into
89,650,000 shares of our common stock (regardless of class) at a current
conversion rate of $0.10 per share and the warrants are exercisable for ten
years from the date they were issued for up to 41,189,000 shares of our common
stock (regardless of class) at a current exercise price of $0.15 per
share. The conversion price of the notes and the exercise price of
the warrants are each subject adjustment for a variety of events, including, for
example, payment of dividends, certain mergers or asset sales, and certain
securities issuances. In conjunction with this offering, we also
entered into related Registration Rights and Voting Agreements. On
November 14, 2005, at the annual meeting of the shareholders, the
recapitalization was
approved
by a majority of the outstanding shares of both classes of stock. On
December 12, 2005, we completed the plan of recapitalization which triggered the
mandatory conversion of certain notes payable in the amount of $8,965,000 into
1,793,000 of the new common stock.
On December 29, 2005, we entered into
an Investment Agreement with Dutchess Private Equities Fund II,
L.P. Pursuant to that Investment Agreement, we received proceeds of
$1,500,000 by issuing a note payable convertible into 300,000 shares of Common
Stock at $5.00 per share and 200,000 founders shares and Common Stock purchase
warrant for 750,000 shares with an exercise price of $5.00 per
share. We also entered into an agreement where we may, at our
discretion, periodically “put” or require Dutchess to purchase shares of our
Common Stock. The aggregate amount that Dutchess is obligated to pay
for our shares will not exceed $10.0 million. For each share
of Common Stock purchased under the Investment Agreement, Dutchess
will pay 93% of the lowest closing bid price on the Over-the-Counter Bulletin
Board (or other principal market on which our Common Stock is traded) during the
ten day period immediately following the date on which we give notice to
Dutchess of our intention to put such stock. Our ability to put the
shares under the Investment Agreement is conditioned upon us registering the
shares of Common Stock with the Securities and Exchange Commission and
satisfaction of certain other customary closing conditions.
On July
21, 2006 we issued a Debenture to Dutchess Private Equities Fund, LP , a related
private equities fund and received proceeds of $750,000. The Debenture is due on
July 21, 2011 and pays twelve per cent (12%) interest. Interest and principal
are payable at such times and under such conditions are outlined in the
Debenture. The Debenture is convertible into shares of our Common Stock at the
lesser of $.70 per share or 75% of the lowest closing bid price during the 20
trading days next preceding the date of conversion (collectively, the two funds
“Dutchess”). The holder may not convert if it would cause the holder
to own more than 4.9% of the outstanding Common Stock of the
Company.
On March
20, 2007, we issued a secured convertible debenture to Cornell Capital Partners
(now YA Investments L.P. ) in the aggregate principal amount of $6,000,000 of
which $3,000,000 was advanced immediately. The second installment of
$2,000,000 will be advanced immediately prior to the filing by the Company with
the Securities and Exchange Commission (the "Commission") of the Registration
Statement. The last installment of $1,000,000 will be advanced
immediately prior to the date the Registration Statement is declared effective
by the Commission. The Debentures mature on the third
anniversary of the date of issuance. The holder of the Debentures may convert at
any time amounts outstanding under the Debentures into shares of common stock of
the Company at a fixed conversion price per share equal to
$0.314. Under the Purchase Agreement the debentures are secured by
substantially all of the Company's, and its wholly owned subsidiaries’
assets.
Under the
Purchase Agreement, we also issued to Cornell five-year warrants in six separate
series as follows:
A
Warrants to purchase 2,384,814 shares of common stock at $0.314 per
share;
B
Warrants to purchase 2,186,079 shares of common stock at $0.343 per
share;
C
Warrants to purchase 2,017,919 shares of common stock at $0.372 per
share;
D
Warrants to purchase 1,748,863 shares of common stock at $0.429 per
share;
E
Warrants to purchase 1,499,026 shares of common stock at $0.50 per
share;
F
Warrants to purchase 1,500,000 shares of common stock at $0.01 per
share.
On
December 11, 2007, the Company received a
letter dated December 6, 2007 ( the "Notice Letter"),
from YA Global Investments, L.P., (formerly known as
Cornell Capital
Partners, L.P.) notifying the Company of
certain Events of Default under the
Secured Convertible Debenture dated March 20, 2007 of the Company (the
"Debenture"). As a result of this default, the entire note has been
re-classified as short term.
Also in
connection with the sale and issuance of the Debentures, the Company entered
into a settlement agreement with Dutchess Private Equities Fund, Ltd. for the
settlement of a dispute regarding the amount due under debt instruments issued
by the Company to Dutchess during 2005 and 2006. Pursuant to the
terms of the Settlement, the Company immediately paid a cash amount of
$1,500,000 with two additional cash payments in the amount of $300,000 each to
be made on the date that (i) the Company files the Registration Statement (or,
if earlier,
within 45
days) and (ii) the Registration Statement is declared effective (or, if earlier,
within 145 days). The Company also issued a Note in the amount of
$1,500,000 and agreed to reduce to $0.10 per share the exercise price of the
warrants issued to Dutchess. Dutchess agreed to terminate any
security interest in the Company’s assets upon the Initial Payment
On
January 26, 2009 the Company announced that it had received the consent of a
majority of the shareholders of record to
amend the Certificate of Incorporation to increase the number of shares of
Common Stock authorized for issuance by the
Corporation from 25,000,000 shares to 50,000,000 shares. The
reason for increasing the number of authorized shares was to ensure that shares
were available to allow for conversions of debt into stock.
On September
24, 2009, the Company acquired all the stock of Employment Screening Profiles,
Inc.(d/b/a Trubackgrounds), a Florida corporation (“Trubackgrounds”), Oldsmar
(Tampa) Florida, engaged in the business of developing and delivering
integrated, customized Web-enabled solutions designed to aid in background
verification, applicant management and human resource collaboration processes,
in exchange for nine-million (9,000,000) shares of common stock of the
company. In addition, the Company is obligated to deliver all
nine-million shares of Common Stock on or before September 1,
2011. The seller shall have the right to require the Company to
deliver up to four million five hundred
thousand (4,500,000) shares at any time after September 1,
2010. If the Company is unable to deliver the four million five
hundred thousand shares by September 1, 2010, then the seller shall be entitled
to an escrow fee payable in cash on a quarterly basis. The escrow fee
shall be calculated at a rate of five percent (5.00%) per annum for the first 12
months following closing, then seven and one-half percent (7.5%) per annum for
months 13 through 18 inclusive and then twelve and one-half percent (12.5%) per
annum thereafter (multiplied by the product of the number of shares remaining in
the Escrow account for the benefit of the seller and $0.1944). See
www.trubackgrounds.com. Trubackgrounds
serves large and small businesses with systems and information designed to
enable intelligent decisions and reducing costs through automation.
Trubackgrounds will continue to be operated as a wholly-owned subsidiary of the
Company and will collaborate in providing enhanced service capability to the
Company’s customers.
Commitments
and Contingencies
Operating
Leases
The
Company leases office space and equipment under various operating lease
agreements which terminate on various dates through 2015. Future
minimum payments under our non-cancelable operating leases total
$1,976,578.
Capital
Leases
|
As
of September 30, 2009 the Company no longer has any obligations with
regards to capital leases.
|
|
License
Agreements
|
The
following represents the contractual obligation and commercial commitments as
of September 30, 2009.
Contractual
Obligations
|
Total
|
Less
than
1
Year
|
1-3
Years
|
3-5
Years
|
||||||||||||
Long-Term
Debt including current portion
|
$ | 4,977,648 | $ | 3,477,648 | $ | 1,500,000 | - | |||||||||
Operating
Leases
|
1,976,578 | 356,578 | 1,080,000 | 540,000 | ||||||||||||
Total
|
$ | 6,954,226 | $ | 3,834,226 | $ | 2,580,000 | $ | 540,000 | ||||||||
Recently
Issued Accounting Pronouncements
On January 1,
2008, the Company adopted Statement of Financial Accounting Standards (SFAS) No.
157 (FASB ASC
820) “Fair Value Measurements” (SFAS No. 157), which provides a
consistent definition of fair value that focuses on exit price and prioritizes,
within a measurement of fair value, the use of market-based inputs over
company-specific inputs. SFAS No. 157 requires expanded disclosures
about fair value measurements and establishes a three-level hierarchy for fair
value measurements based on the observable inputs to the valuation of an asset
or liability at the measurement date. The standard also requires that
a company consider its own nonperformance risk when measuring liabilities
carried at fair value, including derivatives. In February 2008 the
Financial Accounting Standards Board (FASB) approved the FASB Staff Position
(FSP) No. FAS 157-2, “Effective Date of FASB Statement No. 157” (FSP No. FAS
157-2), that permits companies to partially defer the effective date of SFAS No.
157 for one year for nonfinancial assets and nonfinancial liabilities that are
recognized or disclosed as fair value in the financial statements on a
nonrecurring basis. FSP No. FAS 157-2 does not permit companies to
defer recognition and disclosure requirements for financial assets and financial
liabilities or for nonfinancial assets and nonfinancial liabilities that are
remeasured at least annually. SFAS No. 157 is effective for financial
assets and financial liabilities and for nonfinancial assets and nonfinancial
liabilities that are remeasured at least annually for fiscal years beginning
after November 15, 2007. The provisions of SFAS No. 157 are applied
prospectively. The Company has decided to defer adoption of SFAS No.
157 for one year for nonfinancial assets and nonfinancial liabilities that are
recognized or disclosed at fair value in the financial statements on a
nonrecurring basis. These include fixed assets. The effect
of adopting SFAS No. 157 on January 1, 2008 was not material and no adjustment
to Accumulated deficit was required. The Company is currently unable
to quantify the effect, if any, that the adoption of SFAS No. 157 for
nonfinancial assets and nonfinancial liabilities will have on its financial
condition and results of operations.
The carrying
amounts of cash, accounts receivable, prepaid expenses and other current assets,
accounts payable, accrued expenses, deferred revenue, current portion of capital
lease obligations, current portion of notes payable and convertible notes
payable approximate fair value because the best valuation for them is the use in
the business and the short maturity of those instruments. The
long-term portion of notes payable is at 12% per annum and approximates fair
value.
Off-Balance-Sheet
Arrangements
The Company
has no off-balance-sheet arrangements currently in effect or in effect during
the nine months ended September 30, 2009, including but not limited to
any guarantee contracts that has the characteristics defined in paragraph 3 of
FASB Interpretation No. 45 (November 2002), as amended; any retained or
contingent interest in assets transferred to an unconsolidated entity or similar
arrangement, any obligation that could be accounted for as a derivative
instrument, or any obligation arising out of a variable interest (as referenced
in FASB Interpretation No. 46, as amended).
Item 3. Quantitative and Qualitative Disclosures about
Market Risk
We do not
invest in or hold securities or other financial market instruments as a regular
part of our business. We conduct our business in US dollars. Our market risk is
limited to domestic economic and regulatory factors
Item 4. Controls and Procedures
Evaluation of
disclosure controls and procedures.
Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting. Disclosure controls and procedures
are designed with the objective of ensuring that information required to be
disclosed in our reports filed under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), is recorded, processed, summarized and reported
within the time periods specified in the SEC's rules and
forms. Disclosure controls are also designed with the objective of
ensuring that such information is accumulated and communicated to our
management, including the CEO and CFO, as appropriate to allow timely decisions
regarding required disclosure.
Internal
control over financial reporting is defined as a process designed by, or under
the supervision of, the issuer's principal executive and principal financial
officers, or persons performing similar functions, and effected by the issuer's
board of directors, management and other personnel, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles and includes those policies and
procedures that:
Our
management, including the Interim Chief Executive Officer evaluated the
effectiveness of our internal control over financial reporting as
of September 30, 2009, based on the standards and framework
established by the Committee of Sponsoring Organizations of the Treadway
Commission, COSO. Based upon the evaluation performed it was
concluded that our disclosure controls and procedures were not effective as
of September 30, 2009.
Based on our
evaluation for the period ended September 30, 2009, our Interim Chief
Executive Officer has concluded that at the end of this reporting period we have
identified matters that would constitute material weakness (as such term is
defined under the Public Company Accounting Oversight Board Auditing Standard
No. 2 in
our internal controls over financial
reporting. It is concluded that because material weaknesses exist, internal
controls over financial reporting are not effective at this time.
The material
weaknesses relate to the financial closing process and a lack of
segregation of financial responsibilities. Based on the evaluation performed,
disclosure controls and procedures were not effective for the nine months
ended September 30, 2009.
This quarterly report does not include an attestation report of the company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this quarterly report.
Changes
In Internal Control Over Financial Reporting
During
the nine months ended September 30, 2009, we have taken actions to
remediate the reportable conditions and material weakness, including the
devotion of additional resources to the quarterly closing process, and
realignment of certain financial responsibilities to achieve stronger
segregation of financial duties. We intend to continue to further strengthen our
controls and procedures regarding the closing process.
Item 1. Legal Proceedings
On September 15,
2008, Carl L. Green on behalf of Dawn Martinson Green, a stockholder, filed a
complaint against the Company, James Fields, and Jon Latorella,, Carl Green et al v LocatePlus
Holdings et al, Delaware Court of Chancery C.A. No 4032-CC. . The defendants have moved
to dismiss and moved for a more definite statement. The Plaintiffs generally
allege that the individual defendants somehow acted wrongfully when they agreed
to allow certain debt to be exchanged for stock. The Plaintiffs allege against
the individual defendants that as directors they breached their duty of loyalty
by "enriching and entrenching" themselves and that they engaged in self-dealing
by diluting the shares of the Company for the purpose of entrenching themselves.
Against the Company the plaintiffs allege that the Company failed to allow an
inspection of books and records. On March 15, 2009, the court granted
the Company’s motion to dismiss the complaint.
On April 3,
2009, the Company filed a lawsuit styled LocatePLUS Holdings Corp., v.
Dutchess Capital Management, LLC, James Fields et al, in Suffolk County
Superior Court, in Massachusetts (Case No. 09-385-A). The Company is
seeking the return of 19,866,461 shares of our common stock (the “Dutchess
Shares”) improperly issued to and converted by Dutchess Capital
Management, LLC and its related entities (“Dutchess”). Specifically, the
lawsuit alleges that Dutchess breached the debenture agreements between
LocatePLUS and Dutchess by converting more stock than the maximum allowable
under the agreements (4.99%). In addition, the lawsuit alleges that
Dutchess violated Massachusetts state law by charging usurious interest and by
knowingly and willfully committing unfair and deceptive acts or practices. The
suit names the former President and CEO of the Company, James Fields (“Fields”)
as an improper transferee the Dutchess Shares. The lawsuit seeks, among others,
a temporary restraining order and a preliminary injunction enjoining Dutchess
and Fields from transferring the improperly-converted Dutchess Shares from
voting the Shares on any corporate matters until an arbitration can be
completed, seeks the return of the improperly-converted Shares, requests
unspecified compensatory damages and costs, and prays for such other relief as
the court deems proper. Fields and Dutchess denied
liability. Fields also counter-claimed for amounts due under the severance
provisions in his employment agreement.
On or about
May 17, 2009, the Company signed an agreement with Fields settling all issues
contained in the lawsuit,
as well as his counterclaims. The case against Fields, including his
counterclaims, was dismissed on May
18, 2009. The Dutchess Shares are currently held in escrow pending
completion of the payments required under the Settlement
Agreement.
LocatePLUS
intends to pursue the remaining claims vigorously to protect the interests of
its shareholders.”
Item 2. Unregistered Sales of Equity Securities and
Use of Proceeds.
On March
20, 2007, we issued a secured convertible debenture to Cornell Capital Partners
in the aggregate principal amount of $6,000,000 of which $3,000,000 was advanced
immediately. The second installment of $2,000,000 will be advanced
immediately prior to the filing by the Company with the Securities and Exchange
Commission (the "Commission") of the Registration Statement. The last
installment of $1,000,000 will be advanced immediately prior to the date the
Registration Statement is declared effective by the
Commission. The Debentures mature on the third anniversary of
the date of issuance. The holder of the Debentures may convert at any time
amounts outstanding under the Debentures into shares of common stock of the
Company at a fixed conversion price per share equal to $0.314. Under
the Purchase Agreement the debentures are secured by substantially all of the
Company's, and its wholly owned subsidiaries’ assets.
Under the
Purchase Agreement, we also issued to Cornell five-year warrants in six separate
series as follows:
A
Warrants to purchase 2,384,814 shares of common stock at $0.314 per
share;
B
Warrants to purchase 2,186,079 shares of common stock at $0.343 per
share;
C
Warrants to purchase 2,017,919 shares of common stock at $0.372 per
share;
D
Warrants to purchase 1,748,863 shares of common stock at $0.429 per
share;
E
Warrants to purchase 1,499,026 shares of common stock at $0.50 per
share;
F
Warrants to purchase 1,500,000 shares of common stock at $0.01 per
share.
Item 3. Defaults Upon Senior Securities
On
December 11, 2007, we received a letter dated
December 6, 2007 ( the "Notice
Letter"), YA Global Investments, L.P., (formerly known as
Cornell Capital
Partners, L.P.) notifying the Company of
certain Events of Default under the
Secured Convertible Debenture dated March 20, 2007 of the Company (the
"Debenture"). Management is currently working with YA towards a
resolution.
Item 4. Submission of Matters to Vote of Security
Holders.
On January 26, 2009 the Company
announced that it had received the consent of a
majority of the shareholders of record to
amend the Certificate of Incorporation to increase the number of shares of
Common Stock authorized for issuance by the
Corporation from 25,000,000 shares to 50,000,000 shares. The
reason for increasing the number of authorized shares was to ensure that shares
were available to allow for conversions of debt into stock.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form
8-K.
Exhibits
31.1
|
Certification
of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities
Exchange Act of 1934.
|
31.2
|
Certification
of Acting Chief Financial Officer pursuant to Rule 13a-14(a) of the
Securities Exchange Act of 1934.
|
32.1
|
Certification
of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
32.2
|
Certification
of Acting Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
Reports
on Form 8-K
On
January 7, 2008, we filed a Form 8-K and reported under item 2.04 that
by letter received December 11, 2007, dated
December 6, 2007 ( the "Notice
Letter"), YA Global Investments, L.P., (formerly known as
Cornell Capital
Partners, L.P.) notified the Company of
certain Events of Default under the
Secured Convertible Debenture dated March 20, 2007 of the Company (the
"Debenture").
On
January 26, 2009, we filed a Form 8-K and reported under items 5.02 and 8.01
that the Company had received the consent of a
majority of the shareholders of record to
amend the Certificate of Incorporation to increase the number of shares of
Common Stock authorized for issuance by the
Corporation from 25,000,000 shares to 50,000,000 shares
and to the elimination of the current
classification of the Directors into different
terms and replacement with a
uniform one year term for all
directors, the reduction of the Board to seven members and the election of the
following individuals to the Board of Directors:
Dr.
Christian T. Williamson
Richard
L. Pyle
David
Skerrett
Ralph
Caruso
Patrick
F. Murphy
James
Ahern
George G.
Isaac
CHRISTIAN
T. WILLIAMSON, Ph.D., 35, Chairman of the Board, is currently Vice President of
Global Market Strategies at Trojan Technologies a subsidiary of Danaher
Corporation, a $10 Billion industrial conglomerate which operates within
multiple platforms including water treatment. Dr. Williamson joined Trojan in
2001 through the acquisition of Advanced UV Solutions and was promoted to
Vice-President, Global Market Strategies in January 2008 - Executive Team
Member. Prior to that, Dr. Williamson was Managing Director, Environmental
Contaminant Treatment since 2001 in Trojan. Prior to that Dr. Williamson was
Managing Partner for Advanced UV Solutions, LLP, a "spin-off" of the consulting
firm Hydro Geo Chem, Inc. The main goal of AUVS was to liquidate the asset for
Hydro Geo Chem through the sale of the AUVS Company. Dr. Williamson holds a B.S.
in Engineering Mathematics and a Doctorate in Hydrology with an emphasis in
Systems Engineering from The University of Arizona.
RICHARD
L. PYLE, Ph.D., 64, Director, holds a bachelors in physics, an MBA, and a
doctorate in business. He is a former professor of management in the University
of Massachusetts system. In addition to an academic and theoretical perspective
on business management, he also brings years of management experience across a
broad range of manufacturing industries. In particular, he brings the sales /
manufacturing / distribution perspective and experience of being an
owner/manager of a sales and marketing related business. He also provides
consulting services to other businesses and is a commercial real estate investor
and property manager. Dr. Pyle also enjoys philanthropic work and public
service. The focus of his charitable work has been with children, youth, and in
higher education. Dr. Pyle has been the CEO of Continental Consolidated, Inc. of
Worcester, MA. since January 1993
DAVID
SKERRETT, 57, Director, has been Vice President of the Middlesex Corporation for
23 years. Middlesex Corporation is in the top 400 heavy civil construction
companies in the nation with $140 million in revenue. Mr. Skerrett holds a
Bachelor of Engineering from College of Technology. Mr. Skerrett is currently a
member of the Board of Directors and is being nominated to serve an additional
one year term.
RALPH
CARUSO 57, Director, is the founder and President of Caruso Companies, a
conglomerate involved in many facets of industrial construction that has been in
business for over 25 years. Mr. Caruso is currently a member of the Board of
Directors and is being nominated to serve an additional two year
term.
PATRICK
F. MURPHY, J.D.,55, Director,
is the Chairman of the Pulsar Network, Inc. Board of Directors. A graduate of
the Harvard Law School and practicing in Massachusetts for the last twenty
years, he also provides consulting services to growing businesses. He is
familiar with government relations, public relations, and has experience in
developing resources and assets. Prior to his career in law he was a manager at
a prominent social service agency and handled personnel and operation issues in
a crisis-based environment. Mr. Murphy beneficially owns no shares of the
Common Stock of the Company. The business address of Mr. Murphy is P.O. Box
604, Avon, MA 02322-0604.
JAMES
AHERN, 68, Director, is the COO of the Tracy Group, a Casino Management and
Development Company. The Tracy Group focuses on work-out strategies, development
of management and marketing strategies, and ground-up development for a variety
of clients. Prior to joining the Tracy Group, Mr. Ahearn had extensive
experience in executive management in a variety of areas including 30 years
experience with the Federal Bureau of Investigation where he was nominated by
the Director of the FBI for the highest award for executive service in the U.S.
Department of Justice. Mr. Ahearn recently served on the Board of Directors, and
acted as a consultant to Trackpower, Inc., a company operating two race
tracks/casinos in New York State. He has held gaming licenses in New York,
Arizona, Oregon and Washington, as well as the National Indian Gaming
Commission.
GEORGE G.
ISAAC, CPA , 63, Director and Audit Committee Chairman is a Massachusetts
Certified Public Accountant and is affiliated with Massachusetts Board of
Certified Public Accountants and the American Institute of Certified Public
Accountants. He is well experienced in all areas of financial management having
practiced as a CPA for 25 years within a financial career that reaches back
nearly 40 years. His experience includes management, business consulting,
budgeting, managerial accounting, risk management, internal controls, tax advice
and preparation, financial planning and reporting, audit functions, banking
functions, and all treasury functions including SEC compliance. Specifically,
his current practice involves services as a consulting CFO. In the past he has
served as CFO for a publicly traded company, a managing partner of a public
accounting firm, has managed a commercial office building. As a board member of
a community bank and a publicly traded company he has served as a member and is
familiar with the functioning of board audit committees, executive committees,
and compensation committees. His experience includes the negotiation of
significant expansion and growth credit availability but also downsizing to
maintain profitability where necessary. He is proficient in Russian and German.
For the past five years Mr. Isaac has served as a consulting Chief Financial
Officer for several closely businesses in Massachusetts with responsibility for
all financial planning and reporting, tax preparation, banking and related
treasury functions for each of his clients.
On
January 30, 2009, we filed a Form 8-K and reported under item 5.02 that at a
meeting of the Board of Directors held on January 29, 2009, the Board had voted
to elect current Director, Patrick Murphy to the position of Corporate
Secretary.
On
February 25, 2009, we filed a Form 8-K and reported under items 5.02 and 9.01
announcing that at a meeting of the Board of
Directors held on February 18, 2009, the Board of
Directors voted to terminate the employment of James C.
Fields, the then current President, Chief Executive Officer, Acting
Chief Financial Officer and Treasurer. Following this decision,
the Board voted to appoint Geoffrey Lee, President of Entersect, a
wholly owned
subsidiary of LocatePLUS Holdings and Vice
President of Online Services for LocatePLUS as Interim Chief
Executive Officer and President. At a Board meeting held on February
24, 2009, the Board elected Mr. Lee to the additional position
of Acting Treasurer. It is the
intent of the Board of Directors to actively pursue and interview
qualified candidates within a reasonable amount of time to
fill the permanent position of
President and CEO and the position of CFO and Treasurer. Item 9.01 of
this filing contained a Press Release to the effect of the announcement under
5.02 and is attached to this filing.
On April
17, 2009, we filed a Form 8-K and reported under item 5.01 announcing that at a
meeting of the Board of Directors held on April 15, 2009, the Board accepted the
resignation of Director Ralph Caruso from the Board of Directors due to an
increased demand from other business matters. Mr. Caruso stated that
he wished to “thank the current Board and shareholders for giving me the
opportunity to serve and wish the future Board and shareholders the best of luck
with the challenges to come.” Christian Williamson, the current
Chairman of the Board thanked Mr. Caruso for his dedicated services throughout
the years as a member of the Board and wished him well in his future
endeavors. Following the resignation of Mr. Caruso, the Board voted
to extend the open seat on the Board of Directors to Bart
Valdez.
Mr.
Valdez is the former President of the Employee Screening Segment of First
Advantage, a leading risk mitigation and business solutions
provider.
Mr.
Valdez began his career at First Advantage in 2001 where he developed and
executed a strategic plan that improved an $18M regional employment verification
company into a $253M global talent acquisition
business. Additionally, Mr. Valdez has been credited with improving
financial performance from an EBITDA loss of $5M in 2003 to an EBITDA gain of
$36M in 2006.
Prior to
his employment with First Advantage, Mr. Valdez worked as Vice President of
Business Development at Employee Information Services, Inc., where he managed
all aspects of finance, information services, sales partnerships, and
operations
Mr.
Valdez has a B.S. in Management from Colorado State University and a
Masters of Business Administration with a concentration in Finance from the
University of Colorado.
On May
29, 2009, we filed a Form 8-K and reported under items 8.01 and 9.01 that
Christiam Williamson, Chairman of the Board had issued a letter to shareholders.
To view this letter, please go to http://www.sec.gov/Archives/edgar/data/1160084/000116008409000020/shareholderletter09.htm
On June
1, 2009, we filed a form 8-K and reported under item 1.01 and
announced a confidential settlement agreement with James Fields,
former Chief Executive Officer and President. The agreement resolves all
issues between LocatePLUS Holdings Corporation and Mr. Fields concerning
previously disclosed litigation.
On August
17, 2009, we filed a Form 8-K and reported under item 1.01 and announced a
strategic alliance between the Company and the MindBreeeze Enterprise Search
Division of Fabasoft Corporation, Needham, Massachusetts, a leading provider of
enterprise content management solutions. The strategic alliance enables the two
companies to market and deliver a sophisticated public records search solution
– Mindbreeze PR
(Mindbreeze Public Records) that seamlessly connects users to the critical
background information they need – from sources both in side and outside the
enterprise firewall.
On
September 25, 2009, we filed a Form 8-K and reported under items 1.01 and 5.02
that the Company had acquired all of the stock of Employment Screening Profiles,
Inc.(d/b/a Trubackgrounds), a Florida corporation (“Trubackgrounds”), Oldsmar
(Tampa) Florida, engaged in the business of developing and delivering
integrated, customized Web-enabled solutions designed to aid in background
verification, applicant management and human resource collaboration
processes. At this time, the Board of Directors accepted the
voluntary resignation of David Skerrett and voted to appoint Derrick Spatorico,
founder of TruBackgrounds, as a member of the Board of
Directors.
*
* *
Pursuant to the requirements of the
Securities Exchange Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly
authorized.
LOCATEPLUS HOLDINGS
CORPORATION
(Registrant)
SIGNATURE
|
TITLE
|
DATE
|
|
/s/
Geoffrey Lee
|
Interim
President and
Chief
Executive Officer
|
November
13, 2009
|
|
Geoffrey
Lee
|
|||
/s/
Geoffrey Lee
|
Interim
Treasurer
|
November
13, 2009
|
|
Geoffrey
Lee
|
23